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COURT RULING

Net1 gets green light for social grant deductions

Judge finds neither Bathabile Dlamini nor the South African Social Security Agency have the power to block deductions

10 May 2017 - 05:28
Ann Crotty

Social grant beneficiaries queue in Sterkspruit in the Eastern Cape. Picture: DAILY DISPATCH

Net1 and Grindrod enjoyed the unfamiliar experience of courtroom victory on Tuesday, when the High Court in Pretoria ruled that attempts by Social Development Minister Bathabile Dlamini to prohibit deductions from the accounts of social grant recipients were unenforceable.

The judge found that neither Dlamini nor the South African Social Security Agency (Sassa) had the power to block deductions from an established bank account. This power rested with the Reserve Bank.

The Bank had cautioned that the authority Dlamini and Sassa attempted to impose "would disrupt the system of collection and payment by creditors and debtors that would result in a broader economic impact" due to unsuccessful debt collection.

The judge said it was clear that once the grant was transferred into the recipient’s account at Grindrod, it operated as a bank account at any commercial banking institution.

"There is clearly no difference and Sassa equally has no control over such account with Grindrod as it does not have control over any account with a commercial bank."

Acting Judge Corrie van der Westhuizen disputed the claim that the Grindrod bank accounts were merely a method of payment chosen by Sassa and that therefore Sassa and the minister should have control over them.

Sassa, its CEO and the minister were ordered to pay the costs of Net1’s application, which challenged the legality of the amendments to the regulations that were promulgated in 2016.

The ruling means that Net1 subsidiaries and other service providers are entitled to continue making lawful deductions from accounts created to receive Sassa grants.

"Grant recipients may continue to exercise their human rights to transact freely with any service provider utilising the full functionality of their bank accounts," said Belamant.

David Polkinghorne, CEO of Grindrod Bank, also welcomed the decision. He said that although it was understood the Bank set the rules on these matters, it was good to have the situation confirmed by the court. "The original tender was for an open bank account, that cannot be changed after the fact."